To face rapidly shifting business challenges, companies are seeking a different breed of CEO than they were a decade or more ago, according to Heidrick & Struggles’ 2019 Route to the Top report.
This analysis (conducted in September 2019, involving 906 CEOs of the companies listed on 16 country indexes, including the UK FTSE 100 and US Fortune 100) contrasts newly appointed CEOs with their veteran counterparts (people with 15-plus years in the position) to pick out key trends.
C-suite experience on the rise
There is far greater demand for C-suite experience across the board, with the most striking change the increasing demand for chief financial officer (CFO) and chief operating officer (COO) experience. Nearly half of veteran CEOs had no C-suite experience prior to being appointed CEO, but that figure falls to 22% of newly appointed CEOs. Of the 78% of new CEOs with C-suite experience, 54% had prior CEO experience, 29% CFO experience, and 24% COO experience.
CFO background in demand
The 2019 class of new CEOs, appointed within the past year, share a great deal with their predecessors appointed during the global financial crisis. In particular, we see increased demand, particularly compared with the veterans, for CFO experience, not surprisingly considered valuable in a time of slowing growth and financial pitfalls. Overall, however, the data show that 21% of all current CEOs had once been COOs, compared with 18% who had been CFOs.
Older at appointment
This year’s new CEOs were older at their appointment, for both internal and external appointments: 52 years old for the new class versus 39 years old for the veterans still in the top role. It seems that experience counts more in an unpredictable global economic and business context in which new and radically different responsibilities have been stretching the CEO role.
Newly appointed CEOs were far more likely to have worked their way to the top internally, 73% of them compared to 47% of veterans. In challenging times, boards often consider it wiser to retain the CEO they know.
Diversity: a mixed picture
Only a moderate improvement has been seen in gender diversity, with women comprising 9% of new CEOs versus 4% of veterans. However, more new CEOs are non-nationals (20%) compared to veterans (15%), and 44% of new CEOs now have cross-border experience, compared with only 30% of veterans who do.
More advanced degrees
An advanced degree is an increasingly frequent characteristic of CEOs, with 64% of new CEOs possessing an advanced degree (including 27% who have MBAs) compared with 46% of veteran CEOs with some advanced degree, 16% of them MBAs.
Far fewer entrepreneurs
New CEOs are much more likely to have general management backgrounds (43%) compared with veteran CEOs (26%), as well as finance experience (27% versus 11%). Whereas 35% of veteran CEOs had a background as entrepreneurs, virtually none of the new CEOs have had this experience.
Read: Identifying the right CEO for the right time
Access the full 2019 Route to the Top report findings